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“We are taking advantage of the significant reduction in risk and the increase in margin in commercial property since the GFC," he said.

“Margins are 2-3 times higher than pre-GFC; the underlying security has been re-rated; it is a lenders market."

Mr Holm said the impact of Basel 3 combined with APRA regulations made it much more difficult for the banks to lend beyond three years in non-residential sectors.

“Together with global capital constraints this means the supply of capital is inadequate to meet borrower demand."

The new Secured Private Debt Fund will be a joint venture between Balmain and Brookvine.

Brookvine is a boutique fund mananger, and minority shareholder in Balmain, that has raised $8 billion in the past decade.

Balmain is the largest non-bank commercial mortage originator in the country, generating lending of around $2 billion a year, as well as being the largest commercial loan servicer with over $5 billion of loans serviced for non-bank investors.

Mr Holm said the fund would specialise in loans of around $10-$20 million which offered higher returns, more diversified portfolios and easier risk management than larger value commercial property loans.

Separately managed accounts are also available for large investors.

All up, $750 million could be funded.

Mr Holm estimated the return at the moment would be around 350 basis points over 90 day bank bills.

He said Balmain had examined such a fund two years ago and had since refined the proposal.

“We have aligned fees to create loss reserve for investors and there is an industry first structure so loan fees are transparent," he said.

Balmain Investment is chaired by Meredith Brooks, a former non-executive director of Perpetual and former senior executive of the Frank

Russell Company in Australia, the UK and the USA.

She said secured private debt exhibited very different return patterns to investments such as bonds and shares.

“It provides a high degree of capital stability and as such is a useful tool for an institutional investment portfolio seeking sound returns with reduced volatility," she said.